Prolonged Middle East war feared to lead to price hikes: Finance Ministry

The Korean economy continues to be on a recovery path on the back of strong chip exports, but the prolonged Middle East crisis is raising concerns over inflation and growing financial burdens on households, the Ministry of Finance and Economy said Friday.

The Finance Ministry made the assessment in its monthly economic report, known as the Green Book, noting Asia's fourth-largest economy faces "downward pressure" in the aftermath of the geopolitical crisis.

“In the first quarter, the Korean economy expanded and continues to be on a recovery trend, but downward pressure caused by the Middle East war persists," the report said.

“Exports remained strong on the back of semiconductors, and domestic consumption maintained its recovery. But due to the Middle East war, consumer sentiment has weakened, with rising global oil prices leading to inflation and increasing financial burdens on the people," it added.

The Finance Ministry said the government will maintain an emergency response system to minimize the fallout and promptly implement supportive measures, including cash handouts through a supplementary budget.

Korea's consumer prices rose 2.6 percent in April from a year earlier, due mainly to higher oil product prices. It marked the largest on-year increase since July 2024, when inflation advanced 2.6 percent.

The consumer sentiment index fell 7.8 points from the previous month to 99.2 points in April.

Exports meanwhile exceeded $80 billion for the second consecutive month in April, jumping nearly 50 percent from a year earlier, driven by robust semiconductor shipments.

Yonhap